Canada sheds jobs for second month in a row

Canada’s mostly rosy jobs picture of the last two years appears to be darkening as the economy shed workers for the second consecutive month in November, and the unemployment rate moved up one notch to 7.4 per cent.

The consensus of economists had expected a modest pickup of about 17,000 in employment for the month, in part because October’s outsized dip of 54,000 seemed out of proportion with the economy that was growing, if slowly.

Unemployment rate coast-to-coast

Province

Nov.

(Oct.)

Nfld & Labrador

13.2

(12.9)

Prince Edward Is.

11.1

(11.2)

Nova Scotia

8.6

(8.6)

New Brunswick

9.8

(9.4)

Quebec

8.0

(7.7)

Ontario

7.9

(8.1)

Manitoba

5.5

(5.2)

Saskatchewan

4.1

(5.1)

Alberta

5.0

(5.1)

British Columbia

7.0

(6.6)

Canada’s mostly rosy jobs picture of the last two years appears to be darkening as the economy shed workers for the second consecutive month in November and the unemployment rate moved up one notch to 7.4 per cent.

Economists had expected a modest pickup of about 17,000 in employment for the month, if only because October’s outsized dip of 54,000 seemed out of proportion with an economy that was growing, albeit slowly.

But instead another net 18,600 workers fell out of the labour pool last month — all due to a big drop in part-time employment that was concentrated in the services sector and in Quebec.

Statistics Canada noted that despite the most recent declines, there were 212,000 more Canadians working in November than there were at the same point a year ago, a pickup of about 1.2 per cent of the labour force.

But all of those gains are old news. November’s loss marks the fifth consecutive month since June in which the economy has failed to create jobs in the aggregate. In fact, employment is down about 10,000 over the period.

“This is now beginning to be a trend,” said Derek Burleton, senior economist with the TD Bank.

“It shows businesses are not much in the mood for hiring at the moment. Some of the global uncertainties are starting to weigh on business confidence, and I don’t see much of a change in this trend at least for the next six months or so.”

Union leaders and opposition MPs called on the federal government to become more active in stimulating jobs, warning that Ottawa must not assume conditions will improve. They also insisted the Harper government stop slashing jobs at the public service and reconsider other austerity measures.

In the Commons, Finance Minister Jim Flaherty’s parliamentary secretary, Shelly Glover, appeared to rule out new stimulus spending, saying the government must “stick” with its plan to reign in deficits so it doesn’t go the way of Europe. The minister was in Charlottetown launching his pre-budget consultations process.

It is unclear where Canada’s jobs performance will go from here. The U.S. reported a 120,000 employment increase during the same month — good news for Canadian exporters — although the U.S. remains far behind Canada’s job creation pace since the recession.

Analysts said while the two-month employment setback was worrying, it does not necessarily augur more losses going forward.

In part, Canada’s labour market is paying back for strong growth in the first half of the year that was out of proportion to the increase in output, said CIBC chief economist Avery Shenfeld.

There are reasons to expect modest growth going forward, added David Madani of Capital Economics, including recent better news coming out of the U.S., Canada’s largest trading partner.

But few expect strong employment to resume any time soon.

Government hiring, which stabilized the market during the recession and early stages of the recovery, is set to fall significantly as governments seek to bring down deficits; export-oriented jobs don’t look promising given the fearful global situation, and there isn’t much action in the service sector given low confidence measures, noted Burleton.

“Add it all up, and the hiring struggles are likely to extend well into 2012,” he said, with the unemployment rate drifting north to the 7.5 to eight per cent range in the next six months.

The employment decline appears to dovetail with the collapse in business and consumer confidence that began in late July amidst a sustained equity market selloff on worrying trends in Europe’s sovereign debt crisis and political gridlock in Washington that led to a downgrade of the country’s credit rating.

The Bank of Canada and other forecasters warn Canada faces at best sluggish economic activity during this fourth quarter of 2011 and in the early months of 2012 — and even worse outcomes should Europe’s troubles trigger a global financial crisis.

One surprise in the report was that retailers don’t even seem to be overly optimistic about the Christmas shopping season, noting the 34,000-job drop-off in retail and wholesale industries. Shenfeld pointed out that because Statistics Canada adjusts for seasonal factors, the figure suggests that stores are not hiring as much as they did this time last year.

Not all the details in November’s employment report were negative. Full-time employment actually rose by 34,600, more than offset by the 53,300 dip in part-time work.

As well hours worked increased by 0.3 per cent after two consecutive months of declines, and average hourly wages rose to 2.4 per cent after being down to 1.1 in October.

Regionally, the losses were concentrated in Quebec, which saw its employment fall by 30,500 split between part-time and full-time.

The agency said the services sector had a bad month in November. Aside from retail and wholesale, business, building and support services shed 29,000.

The goods producing sector fared somewhat better as 20,000 workers were added in construction, 10,000 in natural resources and about 8,000 in utilities. In the last 12 months, natural resources has seen employment rise an impressive 8.3 per cent, a reflection of the strong global demand for Canadian commodities such as oil, metals and potash.

However, manufacturing continued to struggle, dropping another 7,300 jobs, bringing the number of factory workers in Canada to 1.7 million, the lowest level since 1976 when Statistics Canada began tracking the sector. Union economist Erin Weir said 627,000 jobs have been lost in the sector over the past nine years.

Aside from Quebec, Saskatchewan also had a notable drop in employment relative to its size of 4,200. Nova Scotia picked up 4,400, however, and Ontario saw a gain of 16,600 — 31,800 in full-time workers — during the month. Other provinces did not register major changes in employment.